Unfortunately, there's no solution but higher rates.
* * * * * J B K * * * * *
San Francisco
March 9 (Bloomberg) -- Brian Sack, the New York Federal Reserve Bank's markets chief, said reducing the central bank's $2.3 trillion balance sheet quickly through sales of assets would risk a sudden increase in long-term interest rates.
Instead, a "gradual and passive" decline in assets outlined last month by Fed Chairman Ben S. Bernanke would limit a reversal of the low borrowing costs fostered by $1.69 trillion of securities purchases, Sack said yesterday in a speech in Arlington, Virginia. Bernanke indicated the Fed wouldn't sell assets until the recovery from the worst recession since the 1930s is "more firmly established," Sack said.
http://www.bloomberg.com/apps/news?pid=20601068&sid=a8NfuD9tztSE
